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Self Assessment Pitfalls

Tuesday January 6, 2015

The Self Assessment deadline for submission and payment for tax year 2013-2014 is 31st Jan.

Self Assessment isn't just about checking for unwelcome lumps - although you should probably be doing that too. It's also the way HMRC gets you to do a load of their paperwork for them when you're paying yearly taxes for yourself or your business.

To their credit, they've tried to make it as painless as possible, but you still have to mind your footing. A small mistake when you're filling out the forms can mean months of headaches down the road.

Here are a few things to watch out for.

When you're setting up, you need to get a Unique Tax Reference number and an activation code from HMRC, which they'll only send you by post.

There's an automatic fine of £100 if you're late with your filing, even if you don't actually owe any tax - and those fines go up sharply if you're severely late. You might be able to convince them you've got a valid reason for the delay, but don't count on it.

You need to register as self-employed even if you're making next to nothing running your business. You may think of what you're doing as just a hobby, but HMRC might take a very different view. Even selling on a site like eBay, if you're doing it regularly enough, can count as self-employment.

If you close your business down, you have to file a tax return covering the period right up to the date you stopped trading. HMRC don't like loose ends and will be more than happy to tell you about it.

If, for whatever reason, you don't send your return in on time, HMRC may go ahead and decide for themselves how much you owe. It's quite possible that they'll have very different ideas about that than you.

Tax evasion is a Very Bad Idea. HMRC don't like tax evaders one bit, and they spend a lot of time and energy cracking down on them. Basically, don't even think about it.

Yes, it's a scary list in places, but that's why it's worth talking to the right people before you dive in. RIFT Accounting can talk you through all you need to know or, for a more hands-on approach, we can even deal with HMRC on your behalf. Come and talk to us to find out more.